Not a dream road

The Gwadar-Kashgar trade corridor seems to have become top priority in the present government’s strategy to the revive trade and economy of the country. It was the focus of the prime minister’s visit to China, reciprocated by high-level Chinese delegations to discuss various aspects of this project. 

The construction of rail and road links from Gwadar to China, infrastructure improvement and development of the Gwadar Port all seem to be pivoted around this paradigm. It is widely believed that this will lead to economic development on both sides of border.

China reportedly also aspires to develop the underdeveloped Xinjiang province and Gwadar is the best outlet for its exports and imports to the outside world. It would also provide China with a transit route for crude oil imports from Iran, Middle East and Africa to meet its ever-growing energy requirements. This route is significantly shorter and safer than the present one. 

If that is true China’s goals are specific and measurable. The question is whether Pakistan’s are as well. Are they realistic and achievable in a given time frame? More importantly, does our economy – given its precarious condition – have the capacity to manage the benefits of this mega project?

Gwadar is not a new project for Pakistan – it’s more like old wine in a new bottle. Years of flawed policies and mismanagement have led to the lack of development witnessed there. Now the port has been placed back in the spotlight with a renewed zeal – although accompanied by hardly any planning – of developing the port. If the goal is to usher in an era of progress and prosperity in the underdeveloped and conflict-ridden province of Balochistan then this presents more of a challenge than an opportunity. 

The construction of the port will face a major security peril when insurgency in the province intensifies. The cost of providing security to such development projects renders them unfeasible if the perception among the Baloch nationalists remains that their economic interests are being overlooked. The Iran-Pakistan gas pipeline (IP)is a case in point where the dream of a ‘peace pipeline’ turned into a nightmarish reality. What are the means of ensuring security of both local and Chinese investors this time? If there is no sound policy on this, no one will be interested to invest in a war-zone.

Another important question relates to the bureaucratic management handling the whole project. Do they have the right kind of abilities, skills, and – above all – financial capacity to achieve the project goals what with the enormous delays, violence and financial corruption that Gwadar has seen in the past? Also, is there any sound political plan to take the Baloch on board given their grievances? It seems that without addressing all these challenges the Gwadar project will simply remain a dream.

If our goal is to reap the fruits of access to the Central Asian Republics for trade, even that wish will remain elusive till the port is developed and made functional. Moreover, that will require development of rail and road links to those republics, which seems to be a remote possibility given the prevailing uncertainty in Afghanistan.

It can be argued that we need not stake our economic future on Gwadar alone. Priority must be awarded to ventures that are realistic and achievable within a specific time frame given our dire resource crunch. It is suggested that spending on Gwadar may be integrated with the development projects at a time when the economic and security position of country is both stable. 

Until that happens, the objective of facilitating free flow of trade and investment can be achieved by pursuing the Free Trade Agreement (FTA) with China effectively. At the moment, when more than 90 percent of global trade is being channelled through FTAs then Pakistan must also take advantage of the opportunity knocking at its door. 

It is ironic that during the PM’s visit to China there was no mention of any strategy by the government to accelerate the badly-needed pace of reforms in the FTA. It was an opportunity, alongside the development of Gwadar, to make the terms of the FTA favourable for Pakistan by acquiring reasonable tariff concessions for our declining exports, increasing investment and trade in services, enhancing technology transfer, providing employment opportunities and reducing the share of trade deficit by seeking enhanced market access to the one-billion strong Chinese market thereby positively contributing to the economy of Pakistan. This is a goal far more realistic and achievable – dependent not on exorbitant resources but simply on the ability to negotiate.

Pakistan needs to conduct an independent SWOT analysis of the situation. Its economy is much smaller than that of China’s in terms of GDP, trade and foreign reserves etc. Hence we need to prioritise our goals keeping in view our own constraints before embarking on ambitious projects like the Gwadar-Kashgar corridor. 

Negotiations for accelerating the pace of the FTA will be of more benefit to Pakistan at present than the immediate development of the Gwadar project owing to the daunting challenges that need to be addressed before it is successfully implemented. 

The writer holds an LLM degree in international economic law from the University of Warwick.


http://www.thenews.com.pk/Todays-News-9-199876-Not-a-dream-road